“Bitcoin is an experiment and like all experiments, it can fail. But even knowing it, the inescapable failure that has already happened still saddens me greatly.” These are the words of Mike Hearn who has published a detailed analysis of bitcoin development that he called “The resolution of the bitcoin experiment”.
Hearn has been involved in the sphere of bitcoin for more than 5 years. He has developed the software now widely used by millions of users and hundreds of developers. He has explained the cryptocurrency to the SEC, bankers and ordinary people at cafes and has inspired several of them to create startups.
Despite all the work that has been done, now Hearn admits to stop his participation in bitcoin development. He has sold all his coins as expects the price to go downwards.
He explains the failure of bitcoin: “It has failed because the community has failed. What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.”
Indeed Hearn offers everyone to face the truth and answer honestly the question: if you had never heard about Bitcoin before, would you care about a payments network that:
- Couldn’t move your existing money
- Had wildly unpredictable fees that were high and rising fast
- Allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button (if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)
- Is suffering large backlogs and flaky payments
- is controlled by China
- in which the companies and people building it were in open civil war?
Hearn says his firm ‘No’ and leaves everyone to come to own conclusions independently.
According to Hearn, the current situation in bitcoin industry looks as follows: “The block chain is full. You may wonder how it is possible for what is essentially a series of files to be “full”. The answer is that an entirely artificial capacity cap of one megabyte per block, put in place as a temporary kludge a long time ago, has not been removed and as a result the network’s capacity is now almost completely exhausted.”
Hearn demonstrates a graph that proves the peak of bitcoin price to fall at the end of the 2015 summer. “The peak level in July was reached during a denial-of-service attack in which someone flooded the network with transactions in an attempt to break things, calling it a “stress test”. So that level, about 700 kilobytes of transactions (or less than 3 payments per second), is probably about the limit of what Bitcoin can actually achieve in practice.”
The RBF section of Mike Hearn's "Leaving Bitcoin" post reminds me I'm not going to miss working with blatant liars. https://t.co/Jl4Rb5be6O
— Peter Todd (@petertoddbtc) January 14, 2016
There have been frequent periods in 2015 when bitcoin wasn’t able to keep up with the transaction load being placed upon it. When networks run out of capacity, they get really unreliable. That is the explanation of many online attacks focused on simply flooding a target computer with traffic.
The reasonable question arises: why can’t capacity limit just be increased? Hearn explains that the blockchain is controlled by Chinese miners, just two of whom control more than 50% of the hash power. Both the developers of the “Bitcoin Core” software have refused to implement necessary changes and the miners refuse to switch to any competing product, as they perceive doing so as “disloyalty”. “They have chosen instead to ignore the problem and hope it goes away”, says Hearn.
The author concludes with rather pessimistic statement: “Bitcoin has gone from being a transparent and open community to one that is dominated by rampant censorship and attacks on bitcoiners by other bitcoiners. This transformation is by far the most appalling thing I have ever seen, and the result is that I no longer feel comfortable being associated with the Bitcoin community.”
To prove the existence of alternative points of view, we can tell you a joke:
- Have you heard that bitcoin is dead?
- Yes, for the 89th time!
Indeed, it’s hard to enumerate specialists who sooner or later gave up on bitcoin. 2016 has only started but bitcoin has already been declared dead twice!
However, AndreasMAntonopoulos offers to stay optimistic.
Best way to respond to all the drama in bitcoin is to focus. Buckle down, work, don't get distracted. Engineering solves problems. Code On!
— AndreasMAntonopoulos (@aantonop) January 15, 2016
Indeed, what we see is bitcoin markets still alive and blockchain still operational. Moreover blockchain startups raise huge funds all over the world. Thus it seems to be too early to refuse from the cryptocurrency.